Global toy giant Hasbro is taking decisive action in response to sluggish demand and a challenging market by ramping up cost-cutting initiatives, with Chief Financial Officer Gina Goetter at the helm. The company, renowned for brands such as Nerf, Play-Doh, and Dungeons & Dragons, is grappling with a 15% decline in revenue to $5 billion in 2023 compared to the previous year, prompting a comprehensive review of costs throughout its operations.
The broader toy industry experienced a downturn in 2023, with global sales dropping 7%, according to market research firm Circana. In the U.S., retail sales at hobby, toy, and game stores saw a more moderate decline of 2%, amounting to $21.2 billion, as reported by the U.S. Census Bureau. Hasbro's struggle is reflective of this broader trend, and the company's recent financial report, which fell short of analysts' expectations, led to a 12% decrease in its stock price, closing at $48.67 on Monday.
Goetter, Hasbro's CFO since May 2023, is spearheading efforts to navigate the company through these challenging times. With a relatively new leadership team, including CEO Chris Cocks who assumed the role in 2022 after the passing of longtime CEO Brian Goldner, Hasbro is facing the twin challenges of industry slowdown and the need to divest a costly acquisition.
In response to declining sales, Goetter is aggressively pursuing cost-saving measures. Recently, the company revised its 2025 cost-savings goal to an ambitious $750 million, doubling its previous target of $350 million to $400 million announced just two months ago. This move aims to enhance profitability and create opportunities for reinvestment in the business.
Goetter's approach involves a meticulous review of costs associated with the components of Hasbro's toys and games. Beginning with the games division, which includes popular products like Jenga, the company plans to extend this cost assessment to other product brands throughout 2024. The CFO emphasized that these cost-cutting measures go beyond minor adjustments, stating, "We're not just talking about nickels and dimes. We're talking about material moves that we can make on product costs."
Illustrating the level of scrutiny applied to costs, Goetter highlighted a recent review of Nerf products. The analysis covered factors ranging from the thickness of plastic used to the type of packaging, comparing these costs with industry competitors. The findings revealed that at every stage of Nerf production, Hasbro was spending more than its rivals.
To address this discrepancy, Hasbro compiled a list of 40 cost-saving ideas stemming from the Nerf review. If eight of the most significant ideas are implemented, the company anticipates saving approximately $10 million. Goetter emphasized that the company is also mindful of maintaining product quality during this process, stating, "If the answer is no, we're making the change."
As Hasbro navigates the evolving landscape of the toy industry, the intensified focus on cost efficiency under Goetter's financial leadership reflects a strategic move to fortify the company's financial position and foster sustainable growth in the face of ongoing challenges.
